TOP 100 SPECIAL REPORT Gareth JJ Burgess JJ Gareth 30 | Flight International | 18-24 September 2012 flightglobal.com TOP 100 SPECIAL REPORT Our Top 100 ranking of aerospace manufacturers’ 2011 financial performance reveals the beginning of a sharp divergence in fortunes between companies supplying civil programmes and those reliant on military sales DAN THISDELL LONDON the defence side, and programmes such as the However, the most dramatic response to Boeing 787 and 737, or Airbus A320 and – the defence squeeze has been, and will con- or a quick summary of the aerospace soon – A350 are starting to drive revenue tinue to be, attempts to shift into cyber secu- industry financial situation today, growth along their supply chains. But for rity, typically by acquisition. For military sup- think three words: civil versus de- those heavily reliant on defence, the response pliers, the strategy is attractive because that fence. The 2011 financial data ana- to this market schizophrenia is going to be the sector shares many defence technologies and, F lysed by PwC to compile our latest Top 100 defining story of the aerospace industry for critically, government customers. report on the following pages highlights the the next several years. But PwC’s head of aerospace and defence beginning of the end of the post-9/11 military PwC strategy director Anna Sargeant, who Neil Hampson advises caution; the cyber in- spending surge, but the economic impact on leads the Top 100 analysis team, says the in- dustry culture resembles Silicon Valley more defence-focused companies will not really hit dustry needs to recognise that the current than it does the bureaucratic, process-driven hard until 2013. round of military spending cuts is not a cycli- defence industry. Management will have to Indeed, next year threatens to open with cal budget squeeze that will be reversed in be particularly skilful to beat odds which, he US military spending – the motor behind time. Governments, she says, are changing warns, are stacked against success. much industry growth – dropping off a so- their attitudes to risk and may not return to So perhaps more than at any time in the called “fiscal cliff” of automatic cuts set for 1 the market with deep pockets: “The wave is past decade, management quality matters. January. Between now and then it would take not really there to be ridden any more.” After all, while the defence market is chang- an extraordinary outbreak of bipartisan col- Meanwhile, with new large programmes in ing dramatically, the civil market cannot laboration to resolve this budget impasse, and the pipeline mergers and acquisitions are the maintain its growth trajectory forever. If we even November’s elections may fail to break only route to significant civil business. Like- have learned anything from the past several Washington’s political deadlock. wise on the defence side, at least for systems years, it is that all business is cyclical. ■ At companies where business is balanced integrators; companies with niche specialities To view our full list of the Top 100 aerospace between civil and defence, rising civil sales may still enjoy organic growth and could end companies, including revenue and profit fig- are typically more than offsetting declines on up as acquisition targets. ures, visit flightglobal.com/top100 flightglobal.com 18-24 September 2012 | Flight International | 31 TOP 100 SPECIAL REPORT BillyPix Boeing’s 787 is finally coming in with the revenue BOEING EADS LOCKHEED MARTIN Revenue: $68.7 billion Revenue: $65.1 billion Revenue: $46.5 billion Profit: $5.84 billion Profit: $2.14 billion Profit: $3.98 billion Seattle is back at the top for a second Military sales lag behind Boeing, but Aeronautics sales grew nearly 10% in year after being briefly overtaken by EADS’s Airbus division rules, with $41.3 2011, but other units lagged and US European nemesis EADS billion revenue eclipsing its US rival defence spending cuts were yet to hit +1 GENERAL DYNAMICS UNITED TECHNOLOGIES Revenue: $32.7 billion Revenue: $26.9 billion Profit: $3.83 billion Profit: $3.92 billion Sales grew in 2011 – barely – but aero- The Pratt & Whitney, Sikorsky and Hamilton Sundstrand parent will get a boost in next space led other divisions as Gulfstream year’s Top 100 from its $18.4 billion acquisition of Goodrich (ranked 18th) and its $8.1 shone in a weak business jet market billion revenue, but divestments, including the sale of P&W Rocketdyne, mean UTC may fail to displace General Dynamics to move up to fourth -1 NORTHROP GRUMMAN Revenue: $26.4 billion Profit: $3.28 billion Sales lost 6% from 2010 levels as all divisions went backwards. Shipbuilding business was divested in 2011 RAYTHEON Revenue: $24.9 billion Profit: $2.86 billion Sales dipped for the missiles and defence electronics maker; intelligence Seahawk flies the systems were a bright spot Sikorsky flag Sikorsky 32 | Flight International | 18-24 September 2012 flightglobal.com TOP 100 SPECIAL REPORT +1 +1 +3 FINMECCANICA GENERAL ELECTRIC SAFRAN Revenue: $19.7 billion Revenue: $18.9 billion Revenue: $13.9 billion Loss: $2.22 billion Profit: $3.51 billion Profit: $1.57 billion A third-quarter charge of €753 million Aviation is now a standalone reporting Engines are a Safran strong suit, particu- ($998 million) characterised a miserable segment, which in 2011 accounted for a larly through its CFM partnership with 2011 for the Italian industrial champion fifth of industrial revenues at GE GE, and security is a growth area +1 THALES Revenue: $13.1 billion Touchscreen Profit: not available cockpit, Thales Profitability has been an issue at Thales, concept but a push to better co-ordinate sales and engineering may cut costs and help keep projects on track. The Paris-headquartered company is driving hard to be a technology leader, too, with a creative array of inte- grated cockpit, navigation and in-flight enter- tainment concepts. Talk of a merger or alli- ance with Safran led to speculation that the French government would initiate an industry shake-up in 2011, but all went quiet. Thales and Safran could, however, swap some assets to give each group a tighter focus Thales +2 -7 ROLLS-ROYCE BAE SYSTEMS Revenue: $12.1 billion Revenue: $8.92 billion Profit: $1.51 billion Profit: not available Rolls-Royce ranks behind engine leaders BAE drops down the rankings owing to improved analysis eliminating marine and cyber GE and United Technologies (Pratt & sales. Heavy US military market exposure will make for an interesting 2012 Whitney), but outgrew both in 2011 -2 L-3 Revenue: $11.9 billion Profit: $1.36 billion Sales edged down in 2011, but C3 and ISR showed some growth. Government services no longer figure in the Top 100 +1 HONEYWELL Revenue: $11.5 billion Profit: $2.02 billion Growth of 7% highlights strength in diver- sity – OEM and aftermarket products BAE is a key Lockheed range from engines to avionics Martin F-35 partner ockheed Martinockheed L flightglobal.com 18-24 September 2012 | Flight International | 33 TOP 100 SPECIAL REPORT BOMBARDIER TEXTRON Revenue: $8.59 billion Revenue: $8.39 billion Profit: $502 million Profit: $722 million 2011 results are 11 months only, but The maker of Bell helicopters and Cessna business aircraft saw sales and profits rise both regional and business jet units are despite continued difficulty for Bell’s civil rotorcraft product line. Cessna posted very working under severe market pressure strong growth at nearly 17%, however, after plunging 23% in 2010 +3 NEW TO TOP 20 EMBRAER Revenue: $5.80 billion Profit: $318 million Steady progress marks Brazil’s cham- pion as commercial and defence growth offsets flat sales in business aviation +1 NEW TO TOP 20 MITSUBISHI HEAVY INDUSTRIES Revenue: $5.65 billion Loss: $124 million Sales grew 12% in 2011, a performance that should continue as Boeing relies on Citation X: plenty of MHI for production of 787 wings sales thrust for Cessna Cessna GOODRICH Revenue: $8.08 billion Profit: $1.34 billion The maker of systems ranging from landing gear and air-conditioning to nacelles will disappear from next year’s Top 100 owing to its acquisition by United Technologies. At $18 billion-plus, that deal, which closed this summer, is the industry’s biggest ever 787’s Trent 1000s work in Goodrich nacelles Rolls-Royce 34 | Flight International | 18-24 September 2012 flightglobal.com TOP 100 SPECIAL REPORT TOP 100 REVENUE AND PROFIT GROWTH OF THE AEROSPACE TOP 100 2005-2010 As the chart to the right clearly shows, Top 100 profit growth settled down to nearly zero last year after the financial crisis shock of 2009 and its 30% dramatic near-reversal in 2010. Low single-digit Sales Prot World GDP sales growth is a far cry from the pre-crisis boom 20% years, or even crisis-struck 2008, which only re- ally turned bad in the fourth quarter. But these 10% figures only tell part of the story – and it remains to be seen if a full picture would show more of the same or tell a different tale. What is missing 0 are the contributions of the growing aerospace industries in China and Russia, where anecdotal -10% evidence suggests a significant contribution to global growth. Sadly, though, company reporting in these countries is not (yet?) sufficiently trans- -20% 2005 2006 2007 2008 2009 2010 2011 parent to be included in this analysis. SOURCE: PwC EADS A400M assembly at Airbus Military TOP 20 BY operating MARGIN 2011* TOP 20 BY SALES growth (%) Rank by Rank by Company Operating Rank by Rank by Sales margin sales margin Growth % sales growth (%) 1 55 TransDigm Group 40.4%